UK households are set to spend around £20 billion celebrating Christmas. According to new research commissioned by GoCompare Money, this Christmas the average British household expects to spend £726 on presents, parties, feasting, gifts and decorations. For UK households as a whole – that equates to £20.3bn.

Gifts for loved ones represent just over half of households’ Christmas expenditure, with an anticipated average spend of £372.  A third of households expect to spend over £400, 21% will spend over £500. Festive food and drink, including the main Christmas supermarket shop, is the next biggest outlay, on average households anticipate spending of £168.  Other areas of expenditure include socialising (£103) and buying a Christmas tree, decorations and a trip to the panto or other Christmas experience (£83).

Breakdown of anticipated Christmas spending
Christmas related outlay Average per household Total UK households
Presents for family and friends £372 £10.4bn
Food and drink including supermarket shopping, turkey and all the trimmings £168 £4.7bn
Socialising including Christmas party tickets, meals, new clothing, accommodation and transport £103 £2.9bn
Christmas tree, decorations, trip to the panto and other Christmas themed experiences £83 £2.3bn

When asked how they plan to foot the bill for Christmas, the majority of people surveyed (68%) said they will cover most of the cost out of income.  A quarter (24%) have put money aside throughout the year to cover the cost of their festive spending.  Just under a fifth (18%) will use a credit card, 4% of whom say they will use their card to pay for all their seasonal spending.

Of those who plan to borrow money or use a credit card to pay for Christmas, 36% anticipate they will be able to clear their debt within a month.  The average time expected to repay festive spending is 3.2 months.  A significant minority (14%) reckon it will take them over six months to clear their Christmas debts, while 6% will take over a year to clear this Christmas’ spending.

Commenting on the research, Georgie Frost, GoCompare’s consumer advocate, said, “Christmas is a time for enjoying yourself with friends and family, but it is so easy to get caught up in the festivities and overspend, leaving you with overdraft charges or worse. The last thing you want to do is start the New Year with new debt. As always, the trick is to be aware of the spending pitfalls this month: the early sales, work drinks, panic buys – and have a plan, which includes a budget, for dealing with it. If you are planning to get away over the holidays, buy your tickets in advance; check online that items you are planning to buy in the sale are genuinely good value; and tell your colleagues or loved ones your savings goals, so you don’t feel under pressure to spend when out.”

“Use cash wherever possible as this can help you with budgeting but another option is to spread the cost of Christmas using a 0% credit card. There are a range of deals available at the moment, offering interest-free periods of over 30 months.  But remember, only get a credit card if you know you can pay it all off and if you expect to pay off the debt relatively quickly, you could be storing up trouble by taking a deal that lasts for close to three years. There are plenty of interest free card deals for 6 to 12 months and they could help you focus on paying the debt back earlier, rather than risking forgetting about it, incurring interest or building up more debt.”